Top 5 Year-End Tax Planning Tips

As 2017 comes to a close, now is the best time to think about and revisit your 2017 tax plan. Below are 5 year-end planning tips to make sure you are taking advantage of key tax savings opportunities before it’s too late.

1. Year-End Charitable Gifting
Are their gifts you are planning to make in the next 12 months? If so, it may make sense to complete them before year-end for several reasons:

  • If you complete the gift before year-end, you will get the deduction on your 2017 tax return.
  • The current Senate and House tax proposals include potentially lower tax rates and limits on itemized deductions. If passed, that would mean your charitable deduction will likely provide you a bigger dollar tax savings this year.

If you plan to give, we would encourage you to supercharge the tax benefits by either giving from your IRA if you are over 70.5 or giving appreciated securities:

  • Qualified Gift from IRA – If you are currently retired, the Qualified Charitable Distribution from an IRA is likely where you will get the biggest bang for your buck. The Qualified Charitable Distribution (QCD) allows an individual who is age 70½ or older to donate up to $100,000 of IRA distributions from an individual retirement account directly to charity. Not only does this allow for the IRA owner to exclude the distribution from gross income, but the charitable distribution can also be used to satisfy all or part of your IRA required minimum distributions (RMDs) for the year.
  • Gifting Appreciated Securities – Now is an ideal time to gift appreciated securities. The market is up significantly over the last 18 months meaning there are positions in your portfolio with significant capital gains. Gifting these securities not only provides a tax deduction today, but also allows you to avoid paying capital gains tax on the gain. Even better, the charity enjoys the full value of the gift – a win-win!!

(More information can be found on these at Two Strategies for Getting More Out of Your Charitable Gift )

2. Health Savings Accounts
Depending on your health insurance coverage, you may have access to a Health Savings Account (HSA). If so, this is the most advantageous account you can contribute to. Unlike any other account, not only do you get a tax deduction today but the contribution also grows tax free AND you don’t pay tax when funds are distributed if you use them for medical expenses. After age 65, a HSA can even be used to pay Medicare premiums.

3. 529 Contributions
Do you have a child or grandchild that plans to or is currently attending college?  If so, consider contributing to a 529 college savings plan. In Illinois, contributions to an Illinois 529 plan results in a state tax deduction of up to $10,000 per tax payer.  That is equivalent to $495 of tax savings per individual (couples can deduct $990).

4. Tax Bracket Management
Are you in a lower tax bracket this year than you will be in the future? If so, a Roth conversion or an early IRA distribution to fund cash flow could make sense.

If any of the situations above apply to you, you should consider acting before year-end. Please contact your wealth management team to discuss which of these make sense for your specific situation.


Neil Teubel, CFP® is a Wealth Manager at BDF and also leads the Financial Planning Committee. The FPC champions the continual improvement of the firm’s planning processes so that every client gets the most comprehensive and thoughtful planning possible. The committee ensures BDF’s team has cutting-edge tools and the latest information covering the entire financial planning landscape to best serve our clients. Neil received an undergraduate degree in Financial Planning from the University of Illinois Urbana-Champaign and a master’s degree in Personal Financial Planning from Texas Tech University, where he earned his CERTIFIED FINANCIAL PLANNER™ certification.